In China’s thousands of years of history, there have been hundreds of revolts and rebellions. An idiom to describe some of those sudden challenges to authority is yijuntuqi (异军突起, or emerging force). It originates from the Records of the Grand Historian, and refers to the assembly of rebels that dislodged Qin Er Shi, the son of China’s first emperor, Qin Shi Huang.
A similar term might be employed today to describe the sudden rise of one of China’s domestic make-up brands, which is posing an unexpected challenge to much more established rivals. Known as Perfect Diary, it is hugely popular, and recently trumped its peers to become the bestseller on Tmall on this year’s Singles’ Day (see WiC474). Beating MAC, Lancome and Estée Lauder, it was the first cosmetics brand to claim Rmb100 million of sales during the shopping bonanza, taking just 28 minutes to break the cosmetic firm’s prior full-day record, reported Jiemian.
Market watchers attribute Perfect Diary’s success to its innovative marketing campaigns. Targeting older millennials and Generation Z consumers, Perfect Diary adopts an online-only sales model and relies heavily on social media for promotion. Apart from hiring pop stars and key opinion leaders (KOLs such as livestreaming ‘Lipstick King’ Li Jiaqi; see WiC474), Perfect Diary also harnesses so-called key-opinion-consumers (KOCs) to peddle its products.
Different from celebrity influencers, KOCs typically have no more than a few hundred fans on their social media accounts. However, as everyday shoppers themselves they are more relatable to their followers and generally deemed more trusted, especially when a number of KOLs have been found to adopt dubious commercial practices (see WiC471).
“In the early days, [Perfect Diary] began working with KOCs on a mass scale. This made it appear to the average consumer that the brand was quite popular because everyone was talking about it,” explained Lauren Hallanan of Chatly, a Chinese marketing consultancy. Hallanan also told Jing Daily that much of this work was done on the social e-commerce platform Xiaohongshu (see WiC413) because its algorithms tend to allow posts from lesser-known accounts to appear higher up in the main feeds. “The more Xiaohongshu users are talking about a certain brand or product, the more likely it will appear in the search results for that product category,” she added.
Perfect Diary only rose to prominence after making Xiaohongshu its main base for promotion in February last year. But it has built up some solid momentum, attracting a following of 1.73 million on the platform, versus Maybelline’s 150,000, and luxury label Yves Saint Laurent’s 92,000.
L’Oreal is said to have considered buying Perfect Diary in November 2018, according to 36Kr.
By targeting the younger cohort, especially those born after 1995 – and who account for 31% of the country’s cosmetic buyers – Perfect Diary also tries to capitalise on more localised trends and preferences. Dismissed in the past as cheap and untrendy, local brands now constitute 56% of the Rmb215 billion ($30.59 billion) skincare and make-up market in China, according to a survey by Tencent in May. About 42% of interviewees in the review preferred local brands to foreign imports for the same products.
For industry observers, the changing preferences in the cosmetics market mirror shifts in other consumer segments such as electronics (think Huawei, Oppo, Vivo) and fashion (think Li Ning and JNBY). “In the past few years, we’ve felt that consumers are clearly moving away from international brands to local ones. For one thing, homegrown companies pay more attention to research and development as well as quality. And for another, they know Chinese consumers better, launching products infused with Chinese culture that are strongly appealing to their target consumers,” Fei Qiwen, head of marketing for Pechoin, a Shanghai-based personal grooming brand, told People’s Daily (eye shadows released by Perfect Diary in partnership with nature magazine China National Geography, for instance, are said to be inspired by Chinese landscapes).
Now a champion of ‘new retail’, Perfect Diary has also been building a physical footprint since January and says it has plans to add 600 outlets in three years. So far it has opened some 20 stores at major shopping malls across Guangzhou, Shenzhen, Chengdu, Chongqing and Shanghai. Rather than providing additional points of sale, this bricks-and-mortar presence serves more as a showroom for customers to sample products and pick up their merchandise (orders can only be placed online through WeChat accounts, allowing for better data collection on customers). Perfect Diary is also talking up the ‘experiential’ strategy at most of its stores, which is designed to appeal to its younger consumers.
For instance, the outlet opened on Chengdu’s Chunxi Road – a five-storey, 1,100-square-metre store – includes a café and nail salon.
Founded in 2016, the company has made Rmb3 billion of sales for its mother company Yatsen E-commerce so far this year (the three co-founders were graduates of Guangzhou’s Sun Yat-sen University), according to Pencilnews, a zimeiti. As a result its valuation has surged past $1 billion, following a fundraising round led by Hillhouse Capital in September. Its other financial backers include Sequoia, China Media Capital and ZhenFund, 36Kr reports, noting that the Guangzhou-based unicorn has some similarities in its growth model to firms like Luckin Coffee (see WiC451), which have expanded at an accelerated rate in a bid to go public as quickly as possible.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.